Brazil's Goldfajn says steep yield curve not due to inflation

FILE PHOTO: Brazil's Central Bank President Ilan Goldfajn looks on during an interview with Reuters in Brasilia, Brazil, April 3, 2018. REUTERS/Adriano Machado

NEW YORK (Reuters) - Brazilian Central Bank Governor Ilan Goldfajn said on Tuesday the steep yield curve of Brazilian bonds was not due to inflation or inflation expectations.

Goldfajn said other factors, such as uncertainty over Brazil’s October presidential election, were behind the yield curve, a measure of perceived risk by investors.

“I don’t think it’s inflation because when you look at the expectations for the next several years in the survey (of economists), the answer is just spot on target,” he said in a talk on Brazil’s economic recovery at Columbia University.

Goldfajn said inflation is projected to come in below target at 3.8 percent this year and at 4.1 percent next year, while the 2020 target is 4 percent and the 2021 target will be decided in June.

While Brazil has put its worst recession behind it, the country still has a lot of issues to deal with, the central banker said.

He mentioned the pending pension reform that is vital to rein in Brazil’s fiscal deficit and the elections in October, that are still wide open.